While downplaying the recent volatility in its stock prices, the trade tension that the United States currently has with China and other countries was blamed to be the primary reason for the lackluster performance of the stick of Uber since it launched its IPO in May, said its Chief Executive Dara Khosrowshahi on Tuesday.
The IPO launch of the US based ride hailing firm Uber was the most talked about and awaited public offering by a tech company since the listing on the stock exchange by Facebook about seven years ago. The company however has not been able to live up to expectations of the market in terms of its stock price since the IPO launch.
The stocks of Uber at the IPO were priced towards the bottom of its target range at $45 and there was a 7.6 per cent drop in the share prices at the end of the first day of trading on May 10. On the same day, losses were reversed by the S&P 500 and moved into positive territory.
“The timing of our IPO was very much aligned with our president’s tariff wars, the same day,” Khosrowshahi said at an event at the Economic Club of Washington. “So I think we got caught up a bit in the market swirl. And there’s nothing you can do about that.”
Uber shares fell as low as $36.08 but have since rebounded and were trading at $42.21 on Tuesday, down 0.9% on the day.
Employees “have a six-month lockup so nobody in the company cares anyway what the stock prices is now – it’s a bunch of traders,” said Khosrowshahi. “It doesn’t really affect us… We work on building a great enterprise – the market will take care of itself,” he added.
Talking about the planned departure of its chief operating officer (COO) and chief marketing officer, which were announced last week, Khosrowshahi had said that the COO would not be replaced as he now is trying to organize Uber “in a bit more of a business unit basis.”
They were “tough changes but I think are absolutely the right changes for the next three to five year,” he added.
According to a regulatory filing for Uber’s IPO, there is an option for Khosrowshahi to potentially purchase hundreds of thousands of shares in the ride-hailing company at a price that is well below the price at the time of the company going public.
There was no material change in the grant’s total value, according to the company’s filing.
“I believe in performance-based pay,” Khosrowshahi said Tuesday when asked about his compensation. “If I do very well for shareholders … that’s a circumstance where I want to be rewarded.”
Having joined Uber in 2017, Khosrowshahi was chosen as the CEO to replace company co-founder Travis Kalanick after his ouster from the company.
Khosrowshahi was responsible for preparing the company for going public and with the task of approaching and convincing potential public investors that the culture and business practices at the company had changed ever since the company faced a slew of scandals over the last two years.
(Adapted from LiveMint.com)